Testators establishing estate plans often focus on providing support for dependent loved ones. Other times, they may focus on making arrangements for their most valuable assets. Businesses, real property and even retirement savings may require careful consideration as people plan their legacies.
Those with thorough estate plans can potentially prevent their loved ones from fighting over their property. However, the focus on high-value assets can leave a significant gap in an estate plan. Testators generally need to ensure that they also address their residuary estate in their wills.
What is a residuary estate?
Any assets not specifically addressed in testamentary instruments become the residuary estate of the testator. Frequently, home furnishings, clothing and other personal property are among the assets that become a person’s residuary estate.
Testators may assume that no one wants those assets, but their loved ones may fight over them after their passing. In some cases, the residuary estate may have significant economic value. Other times, it may have emotional value for those who have lost a loved one.
Testators can name one person to receive their residuary estate. They can instruct their personal representative to distribute it equally among multiple beneficiaries. They may also have the option of donating what remains of their resources to others after their passing. Some people even use pour-over wills to transfer their residuary estates to a trust.
Addressing issues that could potentially cause probate conflict well in advance can be one way to ensure that a personal legacy is positive. Making arrangements for seemingly minor assets when drafting a will can help limit opportunities for conflict.